Practical Law Glossary Item 3-382-3828 (Approx. 3 pages)
Glossary
Sponsor
Also known as an equity sponsor. Typically, the manager or general partner of a private equity or venture capital investment fund. The sponsor is typically run by one or more private equity or venture capital investment professionals who are responsible for:
Organizing and promoting capital raising for the fund (typically from insurance and bank holding companies, university endowments, employee benefit plans and wealthy individuals).
Identifying and executing investment opportunities, including leveraged buyouts and venture capital investments.
Managing portfolio companies following an investment, including exiting investments to realize a return on investment for the fund.
The sponsor receives a management fee from the fund (typically 2% of committed capital) to pay for the costs of managing the fund and shares in any profits of the fund (typically 20% of net profits) as compensation for, and an incentive to improve, fund performance.